Midlands firms seek private equity funding in growth push

A large number of mid-size Midlands businesses are looking for private equity investment in a bid to achieve post-pandemic growth, according to a new survey.

BDO 's latest Rethinking the Economy survey of 500 mid-sized companies reveals 26 per cent of companies are actively looking for an investor.

Nearly half (48 per cent) have already secured private equity funding since the onset of Covid-19.

The survey showed that the biggest driver for seeking external investment is additional funding to cover immediate costs (37 per cent).

This was closely followed by funding for organic growth opportunities (32 per cent), while nearly a third of Midlands businesses (32 per cent) admitted the benefit of private equity investment was the ability to move into new markets.

Andrew Mair (pictured), business assurance partner at BDO in the Midlands, said: “From a private equity perspective, the UK is very much 'open for business ' at the moment, with PE investments at record levels during the first six months of 2021.

“Growing investor appetite, coupled with substantial available funds, provides an attractive proposition for Midlands companies actively looking to scale-up quickly in the wake of the coronavirus pandemic.

“This type of investment will allow ambitious Midlands businesses to develop new products and services, expand through M&A and strengthen their workforce at pace, as the regional economy recovers post-pandemic. ”

The Rethinking the Economy survey showed that one of the greatest barriers to growth for Midlands companies in 2021 is access to funding, with nearly a fifth admitting this was a barrier to expansion. Recruitment and retention was also cited as a significant issue.

Mair added: “There are still considerable challenges that exist for Midlands companies in making the transition from recovery to growth.

“However, with 67 per cent of mid-market businesses stating that now in the right time to invest - set against a growing appetite from private equity firms to invest in the region - there is clear momentum in the market as we push towards recovery in the coming months.

“As such, we anticipate a further influx of private equity capital into the Midlands in the next 12 months across key sectors. ”